PAYE late payment penalties
Employers and contractors should be aware that since 1 June 2010 HMRC have begun sending the first batch of PAYE late payment penalty warning letters. The penalties will apply to both employers and contractors that do not pay PAYE on time and will apply to tax, NICs, CIS deductions and Student Loan deductions. The penalties apply to monthly, quarterly and annual periods of PAYE starting on or after 6 April 2010.
A warning letter will usually be issued about two weeks after a missed payment date. The letter is not a penalty notice and cannot be appealed. The letter reminds recipients to make any outstanding payments as well as how to avoid a penalty by ensuring future payments are made in a timely manner. HMRC will not charge a penalty where only one late payment was made in a tax year and the payment was no more than six months late.
The new penalties replace the mandatory electronic payment surcharge which currently applies to ‘large’ employers and contractors that pay electronically and will apply to all employers and contractors regardless of whether they file online or not. The new penalties will be calculated depending on whether payments are made monthly, quarterly or annually.